Every April 15, Americans watch their hard-earned income pay the tax bill. Enough is enough.
It is time to start asking the right questions about tax reform: What are the essential qualities of tax reform and what are the feasible things that can be done to ease the tax burden for hard-working Americans?
Transparency, fairness, and an empowering of the taxpayer are the essential marks of tax reform.
An example of transparency in taxation is the sales tax. Everybody knows what it is, how much it is, and exactly what they’re paying for. Non-optional taxes that are embedded in the cost of goods are an example of a lack of transparency—and the recently enacted Obamacare is full of them.
According to the Heritage Foundation, “the top 1% of income earners paid 40% of all federal income taxes in 2007, while the bottom 50% paid only 3%.” This is hardly an example of fairness and furthermore, it is a disincentive to succeed. Why work hard to get to the top just to have it taken away? Reform focused on spreading the tax burden widely with voluntary inputs and easy compliance is the fair and fiscally responsible answer to the problem.
Finally, reform should empower the taxpayer. The elimination of the death tax, marriage penalty, corporate or personal income tax, and the capital gains tax would empower the taxpayer by generating economic growth under reduced rates, promoting investment and ultimately promoting positive economic activity.
To begin this reform we can begin by passing free market, pro-growth legislation. There are three states leading the way in the frontier of economic reform: New Jersey, Minnesota, and my own state, Georgia.
In Georgia, we are serious about creating jobs and lifting the taxpayer’s burden. The Jobs Opportunity and Business Success Act of 2010 (JOBS Act) is the first step in accomplishing these goals for our state.
Highlights from the JOBS Act include:
• An “Angel Investor” Tax Credit: An income tax credit of up to 50% of an investment made in small or start-up Georgia businesses with 20 or fewer employees. The income tax credits would be available after two years of investment.
• A Quarterly Credit Towards Unemployment Insurance Tax: For each eligible employee hired who is receiving state unemployment benefits, a company will receive a quarterly credit towards their unemployment tax.
• The Elimination of the Net-Worth Tax: The net worth or intangible tax is a hold over from a 1930s law that taxes wealth accumulation. The Tax Foundation advocates the elimination of this tax as Georgia is one of a handful of states that still retain it.
• A Triggered 50% Reduction of the Capital Gains Tax for all Georgia Taxpayers: Georgia, previous to passage of the bill, had the 23rd highest capital gains tax in the country and the second highest in the Southeast, with two of our neighboring states at zero percent.
Hardworking Americans struggle under the tax burden all year long. Those who work hard for their money are the best stewards of how it should be spent, not an ever growing bureaucracy.
The qualities of tax reform outlined here and the legislation to accomplish it are viable and can be begun right now—just look at Georgia, New Jersey, and Minnesota.